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Overview of Compass Diversified (CODI)
Compass Diversified (NYSE: CODI) is a publicly traded holding company that specializes in acquiring and managing a diverse portfolio of middle-market businesses. Founded in 1998 and headquartered in the United States, CODI operates with a unique and strategic approach to long-term value creation. The company’s business model is rooted in its ability to identify, acquire, and support companies that exhibit a clear "reason to exist" in their respective markets. CODI’s diversified portfolio is divided into two primary segments: branded consumer businesses and industrial businesses, each contributing to the company’s robust and balanced revenue streams.
Business Model and Revenue Generation
CODI’s business model is centered on acquiring controlling stakes in middle-market companies with strong growth potential and sustainable competitive advantages. Unlike traditional private equity firms, CODI employs a permanent capital structure, allowing it to take a patient and long-term approach to value creation. The company generates revenue through the operations of its subsidiaries, which span a wide range of industries and markets. By providing operational support, strategic guidance, and growth capital, CODI enables its portfolio companies to thrive while creating value for its shareholders.
Portfolio Segmentation
CODI’s portfolio is strategically segmented into two main categories:
- Branded Consumer Businesses: These subsidiaries leverage strong brand equity to dominate their respective markets. Examples include companies like 5.11, Ergobaby, Liberty Safe, and Velocity Outdoor, which cater to consumer needs ranging from tactical gear and baby products to home safes and outdoor equipment. These businesses are characterized by their ability to capitalize on brand loyalty and market differentiation.
- Industrial Businesses: This segment focuses on manufacturing and providing specialized products and services to niche markets. Subsidiaries in this category include companies involved in protective packaging solutions, engineered materials, and other industrial applications. By addressing specific market needs, these businesses maintain steady demand and operational resilience.
Strategic Approach
CODI’s strategy revolves around partnering with exceptional management teams and fostering growth through operational excellence and innovation. The company’s commitment to its "forever ownership" philosophy ensures that its subsidiaries receive the support needed to achieve long-term success. CODI embraces positive change as a catalyst for growth while maintaining a steadfast focus on its core values and operational principles. This strategic approach not only differentiates CODI from traditional investment firms but also positions it as a trusted partner for middle-market businesses.
Competitive Positioning
In the competitive landscape, CODI distinguishes itself through its permanent capital model, which eliminates the pressure of exit timelines commonly associated with private equity firms. This allows CODI to prioritize sustainable growth and operational improvements over short-term gains. Additionally, the company’s diversified portfolio mitigates risk by spreading exposure across multiple industries and markets. CODI’s ability to identify high-quality acquisitions and drive value creation within its subsidiaries further solidifies its position as a leading player in the middle-market segment.
Market Significance
CODI’s operations extend across the United States, Canada, Europe, Asia Pacific, and other international markets, reflecting its global reach and diversified revenue streams. The company’s focus on middle-market businesses fills a critical gap in the investment landscape, providing growth capital and strategic support to companies that might otherwise be overlooked by larger investment firms. This unique positioning underscores CODI’s importance in fostering innovation and economic growth within its target markets.
Conclusion
Compass Diversified (CODI) exemplifies a forward-thinking approach to business management and investment. Through its diversified portfolio, permanent capital structure, and commitment to long-term value creation, CODI has established itself as a trusted partner for middle-market businesses and a compelling entity within the investment community. By balancing branded consumer and industrial businesses, CODI ensures a resilient and adaptable business model capable of weathering market fluctuations and delivering consistent results.
Compass Diversified Holdings (CODI) announced that shareholders can access their individual tax reporting information by February 22, 2021. The company will mail Investor Tax Reporting packages starting February 23, summarizing reportable tax items for the year ended December 31, 2020. CODI is not subject to federal or state income tax, allowing its annual income to flow directly to shareholders. Shareholders are advised to verify their tax statements and consult a tax advisor for guidance.
Compass Diversified (CODI) plans to release its Q4 2020 financial results on February 24, 2021, after market close. A conference call will follow at 5:00 p.m. ET to discuss the results, featuring the CEO and CFO. Investors can join the call by dialing (833) 900-1532 domestically or (236) 712-2273 internationally, with passcode 1291438. A replay will be available until March 3, 2021. CODI focuses on middle market businesses and aims to leverage its investments for long-term growth, maintaining controlling ownership in its subsidiaries.
Foam Fabricators, a leader in custom protective packaging, has rebranded as Altor Solutions. This change reflects its expansion beyond molded foam into a full-service provider of Packaging, Insulation and Componentry (PIC). Supported by Compass Diversified (NYSE: CODI), the company aims to enhance its product offerings and geographic reach. The rebranding aligns with a growing demand for protective packaging solutions and positions Altor as a partner in solving complex customer challenges. Founded in 1957, Altor operates 17 facilities across North America.
Compass Diversified (NYSE: CODI) has declared a quarterly cash distribution of $0.36 per share on its Common Shares, payable on January 22, 2021. Additionally, quarterly distributions for its Series A, B, and C Preferred Shares were announced at $0.453125, $0.4921875, and $0.4921875 per share, respectively, all payable on January 30, 2021. The distributions reflect the Company’s continued commitment to shareholder returns and its focus on growth strategies, emphasizing its capital allocation approach and diverse subsidiary portfolio.
Compass Diversified (NYSE: CODI) is hosting its 2020 Virtual Investor Day today at 1:00 PM ET, highlighting its strong performance and growth strategy. CEO Elias Sabo emphasized the company's permanent capital model as a key advantage in today's market. The event features presentations from BOA Technology, acquired in October, showcasing its fit solutions and market expansion. CODI’s robust financial position, including successful acquisitions like Marucci Sports and BOA, strengthens its portfolio diversity and growth potential, with expectations for exceeding 2020 guidance.
Foam Fabricators, a leader in custom protective packaging solutions, will support the U.S. COVID-19 vaccine distribution using its twelve advanced manufacturing facilities. The company specializes in lightweight, low-cost, and recyclable EPS molded insulated containers that ensure temperature control for vaccine storage. Acquired by Compass Diversified (NYSE: CODI) in 2018, Foam Fabricators has a 60-year track record and extensive industry experience. They previously assisted with the H1N1 vaccine in 2009, demonstrating their capability to address significant logistical challenges.
Compass Diversified (CODI) will host a virtual investor day on December 10, 2020, at 1:00 PM ET. The event will feature presentations from the management team and its subsidiary, BOA Technology, followed by a Q&A session. Interested participants can pre-register and access the live video webcast. CODI focuses on owning and managing leading middle market businesses, leveraging long-term capital and expertise to drive growth and value creation.
Compass Diversified (CODI) reported robust third-quarter results with net sales of $418.9 million, up from $388.3 million in Q3 2019. The company achieved a net income of $20.9 million, reversing a net loss of $26.5 million in the prior year, and a non-GAAP Adjusted EBITDA of $73.9 million. CODI declared a cash distribution of $0.36 per share, bringing cumulative distributions to over $20 per share since its IPO. The acquisition of BOA Technology, completed post-quarter-end for $454 million, strengthens CODI's portfolio in branded consumer businesses.
Compass Diversified (NYSE: CODI) has successfully acquired BOA Technology Inc. for $454 million, marking a significant expansion into the performance fit market. The acquisition was funded through existing cash and a $300 million draw from its revolving credit facility. CODI now holds 82% equity in BOA, with the remaining 18% retained by BOA’s management and shareholders. This acquisition is expected to enhance CODI's growth strategy, leveraging BOA's innovative Fit System used in various industries worldwide.
Compass Diversified (NYSE: CODI) will release its third quarter financial results on October 28, 2020, after market close. The results will be discussed in a conference call at 5:00 p.m. ET, featuring executives including CEO Elias J. Sabo and CFO Ryan J. Faulkingham. Interested investors can join at (833) 900-1532 (domestic) or (236) 712-2273 (international) with passcode 5056636. A replay will be available until November 4, 2020. CODI manages a diverse portfolio of middle-market businesses, aiming for long-term cash flow and shareholder value.
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